Eddie Rosa, M.D., DAB CR5860 (2021)

DECISION

Respondent, the Centers for Medicare & Medicaid Services (CMS), acting through its administrative contractor, Novitas Solutions (Novitas), denied Petitioner Eddie Rosa’s enrollment application pursuant to 42 C.F.R. §§ 424.530(a)(2) and (a)(3).  Petitioner challenges this denial before me.  For the reasons discussed below, I affirm CMS’s denial of Petitioner’s enrollment application.

I.  Background

Petitioner is a physician who at times relevant here was licensed to practice in New Jersey.  CMS Exhibit (Ex.) 1 at 12; CMS Ex. 2 at 1.  On June 6, 2013, the United States government charged Petitioner by information with one count of violating the federal healthcare program anti-kickback statute, in violation of 42 U.S.C. § 1320a-7b(b)(1)(A).This provision of the Social Security Act (Act), sometimes referred to as the Anti‑Kickback Statute, criminalizes the knowing and willful solicitation or receipt of remuneration in exchange for the referral of “an individual to a person for the furnishing or arranging for the furnishing of any item or service for which payment may be made in whole or in part under a Federal health care program . . . .”   42 U.S.C. § 1320a‑7b(b)(1)(A).

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CMS Ex. 2.  The government asserted in the information that for a period starting in about 2007 through in or around December 2011, Petitioner received remuneration of no less than $29,565 from a diagnostic testing center in exchange for referring his patients to that entity for the furnishing or arrangement of furnishing items and services for which payments could have been made in whole or in part by a federal health care program.  Id.  at 6-7.  Petitioner pleaded guilty to that count the same day.  CMS Ex. 3 at 1.  

On September 9, 2014, the U.S. District Court for the District of New Jersey (District Court) entered judgment against Petitioner pursuant to his guilty plea.  Id.  The District Court sentenced Petitioner to a two-year term of probation and ordered him to pay a $25,000 fine and forfeit $29,565, the proceeds of his crime, to the United States.  Id. at 5-6.

On November 28, 2014, the Inspector General for the U.S. Department of Health & Human Services (IG) notified Petitioner that because of his federal conviction, the IG would exclude him from participation in all federal health care programs for a period of at least five years, effective December 18, 2014.  CMS Ex. 4. 

On July 15, 2016, Petitioner was convicted in a New Jersey state court of a felony for commercial bribery and breach of duty to act disinterestedly, a violation of N.J. Stat. Ann. § 2C:21-10a(3), based on his participation in an identical kickback scheme with a second diagnostic testing center.  CMS Ex. 6 at 1, 6.  The state court sentenced Petitioner to a three-year term of probation, community service, and a $25,000 fine.  Id. at 1.

Petitioner applied to re-enroll as a supplier in the Medicare program in May 2020.Neither party makes mention of the revocation of Petitioner’s enrollment as a supplier to the Medicare program, an action CMS presumably and necessarily took after becoming aware of Petitioner’s convictions and/or his exclusion by the IG.  CMS Ex. 9.  In his application, Petitioner properly identified his convictions and the revocation of his medical license, but made no mention of the exclusion action taken against him by the IG.  Id. at 56.  Petitioner also provided documentation with his application confirming the New Jersey State Board of Medical Examiners had reinstated his license to practice medicine.  Id. at 104.

On June 26, 2020, Novitas notified Petitioner that pursuant to 42 C.F.R. § 424.530(a)(2), it had denied his Medicare enrollment application because he had been excluded by the IG pursuant to 1128(1)(1) of the Act.  CMS Ex. 10 at 1.  Novitas also relied upon 42 C.F.R. § 424.530(a)(3) to deny Petitioner’s enrollment application, finding his felony

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convictionNovitas appears to have relied on Petitioner’s federal conviction, making no mention of the state conviction against him. was detrimental to the best interests of the Medicare program and its beneficiaries.  Id.  Petitioner sought reconsideration through counsel in August 2020.  CMS Ex. 11. 

On August 31, 2020, CMS Hearing Officer Minisha Hicks notified Petitioner she affirmed the denial of his enrollment application.  CMS Ex. 12.  In response to Petitioner’s claim that his five-year period of exclusion had lapsed at the time of his application, Hearing Officer Hicks explained that reinstatement by the IG was not automatic and that the OIG’s List of Excluded Individuals and Entities showed Petitioner remained excluded from participating as a supplier to the Medicare program.  Id. at 4. 

Ms. Hicks found that Petitioner’s federal conviction in the preceding 10 years was per se detrimental to the Medicare program because it resulted in his mandatory exclusion by the IG pursuant to section 1128(a) of the Act.  Id. at 5-6.  She alternatively concluded denial was appropriate because Petitioner’s state and federal felony convictions were, in their own particular circumstances, detrimental to the best interests of the Medicare program and its beneficiaries.  Id.  

Petitioner timely sought a hearing before an administrative law judge (ALJ), and I was designated to hear and decide this case.  On November 5, 2020, I issued an Acknowledgment and Pre‑hearing Order (Pre‑hearing Order) that, among other things, set forth a schedule for the submission of arguments and evidence by the parties.  CMS submitted its pre-hearing exchange and motion for summary judgment (CMS Br.) with 14 proposed exhibits (CMS Exs. 1-14).  Petitioner subsequently filed a brief in response (P. Br.) and 16 proposed exhibits (P. Exs. 1-16). 

II.  Admission of Exhibits and Decision on the Record

Neither party objected to the opposing party’s proposed exhibits.  CMS Exhibits 1 through 14 and Petitioner’s Exhibits 1 through 16 are therefore admitted and entered into the record.

Similarly, neither party has identified witnesses to testify in this matter or requested cross‑examination of an opposing party’s witnesses.  Consequently, I will not hold an in‑person hearing in this matter, and I issue this decision based on the written record.  Civ. R. Div. P. § 19(d).  CMS’ motion for summary judgment is denied as moot.

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III.  Issues

Whether CMS has a legitimate basis to deny Petitioner’s enrollment application seeking Medicare billing privileges under 42 C.F.R. §§ 424.530(a)(2) and (a)(3).

IV.  Jurisdiction

I have jurisdiction to decide this case.  42 C.F.R. §§ 498.3(b)(17), 498.5(l)(2).

V.  Findings of Fact, Conclusions of Law, and AnalysisMy findings of fact and conclusions of law are set forth in italics and bold font.

A. Applicable Law

As a physician, Petitioner is a supplier of health care services for purposes of the Medicare program.  See 42 U.S.C. § 1395x(d); 42 C.F.R. §§ 400.202, 410.20(b)(1).  In order to participate in the Medicare program as a supplier, an individual must meet certain criteria to enroll and receive billing privileges.  42 C.F.R §§ 424.505, 424.510.  CMS may deny a supplier’s enrollment application for Medicare billing privileges for any reason stated in 42 C.F.R § 424.530.  This includes the existence of a felony conviction: 

(a)  Reasons for denial.  CMS may deny a . . . supplier’s enrollment in the Medicare program for the following reasons: 

* * * *

(2) Provider or supplier conduct.  A provider, supplier, an owner, managing employee, an authorized or delegated official, medical director, supervising physician, or other health care personnel furnishing Medicare reimbursable services who is required to be reported on the enrollment application, in accordance with section 1862(e)(1) of the Act, is—

(i) Excluded from the Medicare, Medicaid and any other Federal health care programs, as defined in § 1001.2 of this chapter, in accordance with section 1128, 1128A, 1156, 1842, 1862, 1867 or 1892 of the Act.

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* * * *

(3)  Felonies.  The provider, supplier, or any owner or managing employee of the provider or supplier was, within the preceding 10 years, convicted (as that term is defined in 42 CFR 1001.2) of a Federal or State felony offense that CMS determines is detrimental to the best interests of the Medicare program and its beneficiaries.

(i)  Offenses include, but are not limited in scope or severity to-

* * * *

(B)  Financial crimes, such as extortion, embezzlement, income tax evasion, insurance fraud and other similar crimes for which the individual was convicted, including guilty pleas and adjudicated pretrial diversions.

* * * *

(D)  Any felonies that would result in mandatory exclusion under section 1128(a) of the Act.

42 C.F.R. § 424.530(a)(3). 

The criteria for mandatory exclusion from all federal health care programs relevant here is set forth in section 1128(a)(1) of the Act, which states:

(a)  MANDATORY EXCLUSION The Secretary shall exclude the following individuals and entities from participation in any Federal health care program (as defined in section 1128B(f)): 

(1)  CONVICTION OF PROGRAM-RELATED CRIMES
Any individual or entity that has been convicted of a criminal offense related to the delivery of an item or service under subchapter XVIII or under any State health care program.

42 U.S.C. § 1320a-7(a)(1).

A felony offense specifically identified in the regulations governing enrollment denial is considered detrimental per se, or as a matter of law.  42 C.F.R. 424.530(a)(3)(i); Letantia Bussell, M.D., DAB No. 2196 at 9 (2008).  I have no discretion to disregard findings that

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CMS has made via rule-making.  Bussell, DAB No. 2196 at 13 n.13 (“Once the Secretary . . . has exercised that authority by regulation as to a class of felonies, an ALJ cannot revisit that determination in an individual case where the conviction of an offense in the class is undisputed.”).

A felony offense not specifically listed in the regulations but which is similar to such an offense can also provide the basis for denial of enrollment; in that case, I must look to the circumstances surrounding the conviction to assess similarity.  Abdul Razzaque Ahmed, M.D., DAB No. 2261 at 11 (2009), aff’d, Ahmed v. Sebelius, 710 F.Supp. 2d 167 (D. Mass. 2010) (affirming the ALJ’s consideration of facts and circumstances underlying the offense of conviction to assess its similarity to one of the financial crimes identified as per se detrimental). 

Finally, even if a felony offense is not specifically listed or similar to those listed in the regulations, CMS may determine, on a case-by-case basis, that a felony conviction is detrimental to the best interests of the Medicare program and program beneficiaries.  Brenda Lee Jackson, DAB No. 2903 at 8 (2018); Fady Fayad, M.D., DAB No. 2266 at 16-17 (2009), aff’d, Fayad v. Sebelius, 803 F.Supp. 2d 699, 704 (E.D. Mich. 2011).  In that instance, I must assess whether CMS’ determination that a felony offense is detrimental to the best interests of the program and its beneficiaries is reasonable.  Fayad, DAB No. 2266 at 16-17 (providing the Board would have affirmed an individualized determination by CMS that a felony offense was detrimental because CMS drew a reasonable inference from the nature and circumstances of the Petitioner’s offense).

B. Analysis

1. Petitioner was convicted of a felony offense within 10 years preceding his application for enrollment.

Denial of enrollment pursuant to 42 C.F.R. § 424.530(a)(3) is premised on the existence of a felony conviction within the 10 years preceding the enrollment application.  Here, Petitioner pleaded guilty to one count of violating the federal healthcare program anti‑kickback statute on June 6, 2013.  CMS Ex. 3 at 1.  He submitted the re-enrollment application that CMS denied, giving rise to this case, on May 11, 2020.  CMS Ex. 9.  Petitioner’s felony conviction therefore occurred within the 10 years preceding the date he submitted an enrollment application for Medicare billing privileges.

2.  Petitioner’s felony conviction was per se detrimental to the best interests of the Medicare program or its beneficiaries because it resulted in his mandatory exclusion under section 1128(a) of the Act.

The Act gives the Secretary of the Department of Health & Human Services the authority to determine which offenses are detrimental to Medicare and its beneficiaries.  42 U.S.C.

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§ 1395u(h).  The Secretary’s regulations expressly identify felonies that are per se detrimental – making them, as the Board has observed, “detrimental to Medicare and its beneficiaries as a matter of law – that is, without regard to the circumstances underlying a particular supplier’s conviction . . . .”  John Hartman, D.O., DAB No. 2564 at 4 (2014).  Felony offenses deemed to be per se detrimental as a matter of law include “[a]ny felonies that would result in mandatory exclusion under section 1128(a) of the Act.”  42 C.F.R. § 424.530(a)(3)(i)(D).  The record plainly demonstrates – and Petitioner does not dispute – that he was in fact excluded by the IG under section 1128(a)(1) of the Act as a result of his felony conviction.  CMS Ex. 4. 

Petitioner does not contest the fact of his mandatory exclusion for a felony conviction under section 1128(a)(1) of the Act.He does dispute whether CMS was required to deny his enrollment after the five-year minimum period of exclusion imposed by the IG expired.  P. Br. at 2-3.  His claim that the regulations do not explicitly require him to seek reinstatement by the IG prior to applying for enrollment is irrelevant – the regulations do not require a supplier like Petitioner to be currently excluded.  The mere circumstance of his mandatory exclusion for a felony conviction occurring within the 10 years preceding his enrollment application is sufficient to provide a basis for denial of enrollment.  42 C.F.R. § 424.530(a)(3)(i)(D).  Nor does he address the fact that CMS has, by rule‑making, found a mandatory exclusion action by the IG to be, a priori,detrimental to the Medicare program.  As should be clear, I cannot simply ignore regulations to exercise my own discretion.  UpturnCare Co., DAB No. 2632 at 19 (2015) (providing neither the Board nor an ALJ may overturn denial of provider enrollment in Medicare on equitable grounds).  The regulations plainly identify Petitioner’s felony offense as per se detrimental to the best interests of the Medicare program or its beneficiaries.  42 C.F.R. § 424.530(a)(3)(i)(D).  CMS therefore had a legal basis to deny Petitioner’s enrollment application. 

3. CMS exercised its discretion to consider whether it should deny Petitioner’s enrollment application.

While Petitioner does not contest the fact of his exclusion for a felony conviction occurring within the 10 years preceding his enrollment application, he instead complains that CMS erred by failing to exercise its legal discretion when it denied his enrollment application pursuant to 42 C.F.R. § 424.530(a)(3).The prefatory language of 42 C.F.R. § 424.530(a) indeed states “CMS may deny a provider’s or supplier’s enrollment in the Medicare program for the following reasons .  .  .  .” (emphasis added).  The Board recognized this prefatory language contemplates CMS need not deny enrollment, but that it must find a basis in the regulation to deny enrollment, if it wishes to do so.  Ronald Paul Belin, DPM, DAB No. 2629 at 4 (2015), citing Brian K. Ellefsen, DO, DAB No. 2626 (2015) (“The Board has recently accepted CMS’s position that its determination (and that of its contractors) about whether to deny a particular supplier’s enrollment application under section 424.530(a)(3) is discretionary, not mandatory, even where the underlying conviction is for an offense within one of the categories that CMS has determined to be detrimental to the best interests of the program and its beneficiaries.”).  P. Br. at 1-2.  Petitioner asserts that in its reconsidered determination denying his enrollment application, CMS “simply

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reverted to a default position of denial once it identified a basis, without the required analysis that would indicate an exercise of discretion.”  P. Br. at 2.  He claims, for example, that CMS failed to consider the fact that his exclusion period had “expired,” his “six year period of rehabilitation,” or any other mitigating circumstances.  Id. 

Petitioner’s argument is without merit.  There is no requirement under the regulations that CMS articulate its awareness of its discretion not to deny enrollment under one of the bases found at 42 C.F.R. § 424.530.  It is true the Departmental Appeals Board has, in at least one instance, remanded an ALJ decision affirming an enrollment denial because the specific language contained in a contractor’s denial decision raised the concern it had not recognized its own discretion to approve or deny the application based on 42 C.F.R. § 424.530.  Ellefsen, DO, DAB No. 2626. 

But the circumstances here are sufficiently distinct from Ellefsen to reject Petitioner’s claim.  In the first place, CMS, not the contractor, issued a reconsidered determination.  In her detailed determination, CMS Hearing Officer Minisha Hicks discussed the facts and circumstances of Petitioner’s felony offenses and clearly gave individualized consideration to whether it was appropriate to enroll him as a supplier to the Medicare program.  She took note of and considered mitigating factors proffered by Petitioner’s counsel.  CMS Ex. 12 at 3-5.  She also specifically considered his argument that “CMS should not have used its discretion to deny his Medicare enrollment application.”  Id. at 3.  

And while she was not obligated to do so, having already found CMS had a valid basis to deny Petitioner’s enrollment application for his prior exclusion by the IG, Hearing Officer Hicks considered the nature of Petitioner’s felony convictions, observing Petitioner “prioritized his own financial interest over his patients’ care” and that his criminal behavior demonstrated a “reckless disregard for the health and safety of his patients.”  Id.  She made particularized findings as to how Petitioner’s criminal behavior demonstrated a present threat to the Medicare Trust Funds, noting:  

It is of particular concern to CMS that Dr. Rosa’s crime involved making patient referrals to an imaging center for his own personal enrichment.  Dr. Rosa’s conduct calls into question whether he can be a reliable partner in the Medicare program, as his actions placed the Trust Funds at risk.  CMS is concerned that the Trust Funds will be placed in jeopardy if Dr. Rosa participated in the Medicare program as a supplier.

Id. at 5. 

There is no evidence here that CMS evidenced an unawareness of its discretion to permit Petitioner’s enrollment.  Indeed, Petitioner highlighted to Hearing Officer Hicks that he did not believe CMS had properly exercised its discretion, and she went to considerable

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lengths to explain why CMS thought his enrollment was a present risk to the integrity of the Medicare program and its beneficiaries.  The record before me demonstrates CMS was aware it did not have to deny Petitioner’s application, but nevertheless thought it necessary to do so. 

Ultimately, while Petitioner urges me to substitute my judgment and determine CMS failed to exercise its discretion to deny his enrollment application, P. Br. at 3, my role is to determine whether CMS established a legal basis to take the action it took against Petitioner, not whether CMS should or should have not exercised its discretion in his favor.  John A. Hartman, D.O., DAB No. 2911 at 21 (2018) (“The authority to balance equitable considerations with risks to the program and beneficiaries rests with CMS, while our role is to evaluate if CMS’s action is legally authorized.”). 

CMS has established it had the authority to deny Petitioner’s enrollment based on his felony conviction for a per se detrimental offense that occurred within the 10 years preceding his enrollment application.  CMS has also demonstrated it was aware of its power to exercise discretion in considering Petitioner’s application and exercised that discretion based on its own assessment of the nature of Petitioner’s conviction and mitigating circumstances he identified.  As such, I must affirm CMS’s denial of Petitioner’s enrollment application. 

4. I do not need to decide whether CMS had a legitimate basis under 42 C.F.R. § 424.535(a)(2) to deny Petitioner’s enrollment application. 

Having concluded that CMS had a legitimate basis to deny Petitioner’s enrollment application based on his felony conviction, I need not consider whether denial of Petitioner’s enrollment application under section 42 C.F.R. § 424.530(a)(2) was reasonable. 

VI.  Conclusion

I affirm CMS’s determination denying Petitioner’s Medicare enrollment application.